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Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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Speaker 1: day we bring you insight and analysis into the most

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Speaker 1: important legal news of the day. You can find more

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Speaker 1: episodes of the Bloomberg Law Podcast on Apple podcast, SoundCloud

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Speaker 1: and on Bloomberg dot com slash podcasts. Whahwei has decided

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Speaker 1: to go forward with a full blown legal offensive after

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Speaker 1: defending itself for years against US accusations of espionage and

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Speaker 1: bank fraud, and even criminal charges for alleged theft of

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Speaker 1: trade secrets. Joining me is Peter Henning, professor at Wayne

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Speaker 1: State University Law School. Peter, according to Bloomberg sources, Whahwei

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Speaker 1: plans to file a lawsuit this week. What might some

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Speaker 1: of the claims be Well, certainly, one of the claims

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Speaker 1: appears to be that the legislation that prevents the government

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Speaker 1: from purchasing equipment from Huawei and another company, ZTE is

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Speaker 1: what they're going to call a bill of a tainder,

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Speaker 1: which is not something that many people are familiar with,

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Speaker 1: but in the Constitution it says that Congress can't pass

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Speaker 1: a law that designates an individual as a criminal without

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Speaker 1: their having gone through a full scale criminal trial and

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Speaker 1: criminal prosecution. So I think what they're going to try

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Speaker 1: to claim is that the legislation that was passed last

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Speaker 1: year is in fact an unconstitutional bill of attainder. It's

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Speaker 1: that's a very hard argument to win, but certainly something

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Speaker 1: that they can try in an effort to slow down

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Speaker 1: the federal government. Another front for Huawei is a lawsuit

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Speaker 1: in Canada by Whawei's finance minister for allegedly trampling her

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Speaker 1: constitutional rights. Tell us about that, well, it's an interesting

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Speaker 1: claim that their former chief financial officer, maybe current chief

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Speaker 1: financial officer, has made that she's claiming that when she

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Speaker 1: was first detained by the Canadian authorities, that they got

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Speaker 1: her to give her passwords for cell phones and an iPad,

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Speaker 1: and only later did they explain that, in fact, she

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Speaker 1: was being detained at the request of the United States government.

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Speaker 1: So they're trying to raise an issue here that the

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Speaker 1: way the Canadian authorities acted was improper and therefore that

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Speaker 1: paints the entire extradition process and she should not be

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Speaker 1: sent to the United States to face the criminal indictment

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Speaker 1: that was returned in Brooklyn, uh and unsealed back in January.

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Speaker 1: That seems like a very technical argument and aren't almost

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Speaker 1: all cases of extradition to the United States honored by Canada.

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Speaker 1: Usually they are, and certainly that the key issue in

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Speaker 1: extradition is what's called dual criminality. Does each country designate

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Speaker 1: certain conduct as a criminal violation. Usually you don't look

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Speaker 1: at the procedures that the police followed. But if she's

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Speaker 1: raising a constitutional claim under the Canadian constitution and says

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Speaker 1: her rights were violated, that could have some impact on

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Speaker 1: how the Canadian cord and ultimately the Canadian Justice Ministry

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Speaker 1: determines whether to extradite her to the United States. Peter,

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Speaker 1: let's talk about the cases pending against Huawei. It pleaded

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Speaker 1: not guilty to charges of trade secret theft in Seattle.

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Speaker 1: It will be arraigned on March fourteen on fraud and

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Speaker 1: sanctions charges in Brooklyn. Tell us a little bit about

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Speaker 1: those two cases. Well, the Seattle case is coming out

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Speaker 1: of a case that T Mobile had filed, essentially claiming

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Speaker 1: that Huawei sent spies in to steal the plans for

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Speaker 1: a robot that T Mobile used in order to figure

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Speaker 1: out whether cell phones were having issues. That one is

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Speaker 1: a fairly straightforward trade secrets case. The Brooklyn case is

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Speaker 1: really the probably the greater threat to Huawei because it's

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Speaker 1: alleging bank fraud and a series of false statements by

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Speaker 1: what the government claims was still an active subsidiary of

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Speaker 1: Huahwei that was dealing with Iranian companies, and of course

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Speaker 1: that's the in violation of the American Economic sanctions law.

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Speaker 1: But also too that Huahwei convinced banks to do transactions

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Speaker 1: with the Iranian companies and lied to the banks. And

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Speaker 1: of course bank fraud is a very serious offense. For

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Speaker 1: the former CFO, it could be punishable by up to

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Speaker 1: thirty years in prison. Now unlikely anyone would get that,

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Speaker 1: but that's a very serious crime and one certainly the

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Speaker 1: federal government UH and the Justice Department views as a

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Speaker 1: significant violation. How much are these prosecutions of Huawei about

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Speaker 1: the US concern about five G wireless technology and Huawei's

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Speaker 1: place in the development of that, Well, certainly the legislation

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Speaker 1: that was passed, and if Huahwei challenges that legislation, it's

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Speaker 1: really designed to keep Hahwei out of the United States market.

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Speaker 1: And of course its products have been appealing because they

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Speaker 1: are at a fairly low price, and so telecommunications companies

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Speaker 1: are always going to go usually with the lowest bidder.

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Speaker 1: But this is truly an effort to keep Huawei's equipment

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Speaker 1: out of the United States because of concern that somehow

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Speaker 1: the Chinese government will be able to use it for

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Speaker 1: spying purposes. So you know, this is one part of

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Speaker 1: a much broader effort here to confront China over trade

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Speaker 1: secret theft and how the Chinese government subsidizing companies and

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Speaker 1: trying to get their products into the United States. I

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Speaker 1: think this is a serious concern, certainly of the Trump administration,

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Speaker 1: and I think they are quite willing to confront China

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Speaker 1: over this and to use Whahwei in a sense as

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Speaker 1: if you will not I don't want to say a puppet,

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Speaker 1: but maybe as a cutout or a vehicle to try

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Speaker 1: to confront the Chinese government. What kind of penalties if

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Speaker 1: we always found guilty in Brooklyn, what kind of penalties

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Speaker 1: could the company face? Well, it could certainly face some

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Speaker 1: serious forfeiture penalties. And indeed there is the chance that

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Speaker 1: the government would try to claim or to take all

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Speaker 1: of its US subsidiaries assets as part of an asset forfeiture.

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Speaker 1: Because the dollar figures that are involved here with the

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Speaker 1: Iranian trading are quite substantial and so there is a

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Speaker 1: forfeiture count in there. That's Peter Henning of Wayne State

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Speaker 1: Universe C Law School. Thanks for listening to the Bloomberg

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Speaker 1: Law Podcast. You can subscribe and listen to the show

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Speaker 1: on Apple Podcasts, SoundCloud, and on Bloomberg dot com slash podcast.

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Speaker 1: I'm June Grosso. This is Bloomberg